Today, affiliate marketing remains a highly attractive endeavor because it is performance based, presenting low risk.  If you are selling products or services over the Internet, Affiliate Marketing should be an essential part of your e-Marketing Strategy.

If and when you decide that Affiliate Marketing Program is right for your organization, the very first question you should ask yourself is should I go in-house and establish my own unique Affiliate Marketing Program or should I engage a third-party vendor that has a proprietary software or solution to manage my program? 

In my opinion, when it comes to establishing an Affiliate Marketing Program, if you want to do it right the first time, developing an in-house program rather than engaging a third-party affiliate marketing vendor might just be the way to go.  Not to say that these vendors do not know how to manage affiliate programs, they definitely do a good job and offer tools to help effectively manage your program. But, as we all know there are things to consider especially in regards to costs, management and intellectual property rights.

First of all, let’s discuss costs:
If you choose a third-party vendor, it could represent one of the more expensive options for your organization, as some charge enormous first-year licensing fees that can range up to $10,000.  In addition, you would incur ongoing yearly renewal fees that can be quite high as well. Most vendors will also charge exuberant monthly fees for Client or Account Executive services.

If you choose to go in-house, either your organization might have a team of programmers to utilize or you might have to hire a web application development company to design a custom program.  The bottom line is that an in-house program would be more cost effective over the long run.  Your organization would not have to pay license fees or ongoing renewal fees, the program developed would be your intellectual property.  Also, Client or Account Executive services could be maintained by your own Marketing department to avoid the extra monthly fees that could incur by utilized a third-party vendor.

Advantages of In-House Affiliate Marketing Program:

• You are in complete control of the program
• More Customizable Solutions such as Private Label and Co-branded Pages for potentially high performing Affiliates
• No commissions taken from Affiliate earnings allowing you to offer a higher percentage
• The Affiliates are yours and you have complete contact details
• There is potential for greater tracking accuracy
• More Adaptable and Versatile to your specific web site allowing ease of integration

Disadvantages of In-House Affiliate Marketing Program:

There are very few disadvantages when it comes to establishing an in-house affiliate marketing program and these should not really prevent you from going against this option.

• You must find your own Affiliates (This can actually be good as you would acquire more targeted Affiliates that could potentially give you better performance)
• Hands on Affiliate Payment, You would have to send out checks to Affiliates (This actually can be good, as you would have more control of Accounting and Financial details)
• Administration Time (Yes, it would take more management time. But it would show that you are more proactive in making your program a success)

Conclusion
In order to maximize the true potential of an Affiliate Marketing Program, whatever option you choose, your organization would have to remain proactive in the whole process.  Just looking at the advantages of an in-house program should be enough to say that this option might just be the way to go.

What is your opinion on In-House Affiliate Marketing Programs vs. Third-Party Affiliate Marketing Programs?  We would like to hear from you, please comment below.

Ankush Agarwal
Senior Search Marketing Analyst
MarketNet, Inc